Twitter shares fall 19% to $34.58 as monthly users decline by 1 million

Twitter Inc shares plunged the most in two years after the social media company said monthly users dropped by 1 million in the second quarter from the first and predicted further declines as it continues to fight against spam, fake accounts and malicious rhetoric.

 

Monthly active users were 335 million, San Francisco-based Twitter said Friday in a statement. Though that measure was up 2.8 per cent from a year earlier, the company expects monthly visitors to fall again in the current period. Twitter blamed the projected drop on intensified efforts to clean up the platform, stricter privacy rules in Europe and changes to the way its service is used through SMS messaging.

 

“We are confident that this is in the best long-term interest of the platform and will enable long-term growth as we improve the health of the public conversation on Twitter” and reallocate resources, including those used to prepare for the data privacy changes in Europe, Twitter said in a note to shareholders accompanying the earnings release.

 

The market appeared unwilling to wait and see. The shares plummeted as much as 19 per cent to $34.58, the biggest intraday decline since October 2016.

 

Twitter reported net income for the third consecutive quarter, which has helped drive the shares 79 per cent higher this year to $42.94 at Thursday’s close. But the company gave a forecast for third-quarter earnings before interest, taxes, depreciation and amortization of as much as $235 million, falling short of analysts’ average estimate of $268 million.

A SOLACE IN HIGHER REVENUE

 

• Monthly active users at 335 million, a decline from 336 million in the first quarter
• Revenue increased 24% to $710.5 million in the period, topping the analyst average estimate of $697.3 million
• Net income was $100.1 million, or 13 cents a share, compared with a loss of $116.5 million, or 16 cents. Adjusted earnings were 17 cents a share. Analysts projected of 16 cents
• International revenue grew 44% in the quarter from a year earlier, while sales in the US, the company’s largest market, increased 10%. Japan remains Twitter’s second-largest market, growing 65 per cent and generating $122 million